Rice in China – What Susan Found on Her Doorstep: John V. Walsh

Susan Rice has just completed her visit to Beijing to prepare for Obama’s November visit. She arrived as the envoy of the President of the Indispensable Nation and was greeted at the very highest level by Xi Jinping himself, president of one of the many Dispensable Nations.

Susan probably conceives this as an advance visit in more ways than one since Beijing is the final scheduled stop on the U.S. Empire’s march through Eurasia – after sacking Iraq, Libya, Syria, Iran and Russia. Or so the plan goes.

But Rice might surely was given considerable pause on her visit. Just as she arrived China Daily, the English version of which was surely dropped outside her door in the morning, carried a front-page story, headlined: "China ‘largest economy’ by 2024." And with it was carried the striking graphic:

Reader, take note of the phrase "Nominal GDP." This means GDP in real dollars. The alternative measure and the one more often used is given in terms of PPP (Purchasing Power Parity), which corrects the value of the dollar for purchasing power from country to country. By the PPP measure China is already the equal of the US or will be so within a year’s time according to the World Bank.

In my recent visit to Beijing I was given some lessons in PPP. For example a one-hour to trip in a very comfortable taxi as a solo customer to the airport from downtown Beijing was approximately 15 US dollars. In NYC, the equivalent taxi ride would cost roughly 75 US dollars sans tip. (The Chinese do not expect tips and often will not take them.) The PPP measure is important, because it indicates how much some very important things to those with Susan Rice’s mindset would cost in China – like a soldier’s salary or a submarine.

But "nominal" GDP equality as shown in the graph above paints an even more stunning picture of China’s rise since it is given in absolute dollars not relative ones. Moreover, this prediction came not from the Chinese government but from the highly respected US firm of IHS Inc., headquartered in Colorado and"one of the top 10 Scientific, Technical & Medical (STM) Information companies in the world."

If Susan had continued with her complimentary China Daily, she would have read: "’Over the next 10 years, China’s economy is expected to rebalance towards more rapid growth in consumption, which will help the structure of the domestic economy as well as growth for the Asia-Pacific as a region,” Rajiv Biswas, IHS’s chief economist for Asia-Pacific, said…" Biswas continued, ‘The transmission effects of the strong growth in Chinese consumer demand are already being felt throughout the APAC (Asian PACific) region. Rapid growth in Chinese consumption drives demand for exports of commodities, manufactured goods and services from other APAC countries to China, with ASEAN (Association of Southeast Asian Nations) countries expected to be major beneficiaries of the growth in Chinese consumption.’’

IHS expects China’s GDP to be 20% of the world’s total by 2024 which is about the percentage the US now holds, a percentage that is declining as that of the non-Western nations contributes a greater share. Biswas added: "”Science, technology and innovation, these are some of the key sectors that will be crucial in helping to transform China’s economy from the low-cost manufacturing, export-driven economy of the past three decades into a higher value-added economy driven by domestic consumer demand. In 2025, if we were to take a global economic snapshot, China’s economy will play an even bigger role as a key driver of global trade and investment flows."

Simply put, the great economic engine of the planet is now in East Asia, with China at its heart. Now consider how the nations of the region must view the US alternative to China, the Trans Pacific Partnership which would pair those nations with the US, a stagnant economy, and Japan, a declining economy. Which side to choose? That question gives a whole new depth of meaning to the phrase "no brainer." One might also ask why should Russia cling to Europe and the West when the dynamism and wealth creation now lies to the East. All this is not lost on Russia. The disaster that was the Sino-Soviet split is not likely to recur in the form of a Sino-Russian split, and that is due in no small part to US policy.

As Rice looked a little farther into her China Daily, she would have found some news that might cheer her up, if she did not think too deeply on it. This piece was headlined "China’s Poverty Cut Off Too Low: Expert." It would certainly surprise anyone who thought that self-criticism was to be found "only in America." The article reports that China has more people living in poverty than was thought, according to Wei Shanghan of the Asian Development Bank. So while China now has a middle class of 400 million, exceeding the entire US population, it also has another 400 million in poverty. And although Mr. Wei states, “China’s achievement in poverty alleviation is the largest in the world" (in fact in world history), much remains to be done. Wei urged the Chinese government to foster the development of social insurance and subsistence security systems that are accessible to the poor.

Rice might rejoice at this new found weakness in the target of Obama’s Asian pivot, but she would be mistaken. China’s goal is to get rid of all that poverty, and as its record shows, it is deadly serious about that. (The US press would put that another way. It would contend that the Chinese leadership does all that only out of fear of losing its governing role. You see only the Indispensable Nation and a few of its allies act altruistically or patriotically.) And as that 400 million escapes poverty in the coming years, the Chinese market will grow much larger and Chinese economic power will grow mightier.

Perhaps it is time for Rice, her boss and their clique to think more about the Chinese idea of win-win among nations and less about US domination of the Eurasian land mass. But the prospects for that new thought among the US imperial elite look frighteningly dim right now. Get ready for a rough ride, world.

John V. Walsh writes for the Unz Review, Antiwar.com, CounterPunch.com and DissidentVoice.org. He can be reached at John.Endwar@gmail.com.

12 thoughts on “Rice in China – What Susan Found on Her Doorstep: John V. Walsh”

Yes, China will grow. But there are some serious bumbs in the road, in particular China is currently barrelling into the wall of the end of the building boom: the low-hanging fruit of easy-money fuelled housing construction (apparently quite a bit of it of dubious quality and quite a bit unoccupied) has now been picked and a painful economic restructuring and serious write down of captial invested in non-performing and even unmaintainable or just plain crap goods must be navigated in the next 5-10 years. This WILL set the rosy predictions above back quite a bit.

This is the story few tell because it’s not positive and actually requires long experience in China. A culture obsessed with first appearances simply doesn’t provide much of a foundation for a long-term commitment to maintenance and built-in quality, the two essential parts of longevity and long-term efficiency.

The headline story is China’s amazing rush into building X,Y,Z: today high-speed rail, tomorrow, thousands of wind turbines. What few care to examine is the maintenance requirements of every one of those thousands of wind turbines. Without obsessive attention to the quality of each component and regular maintenance of each turbine, those initially impressive thousands will dwindle to hundreds and then dozens of operable turbines as the years grind away at inferior components and a lack of maintenance takes its toll.

The economic boom in China has consisted of rapid increases in true economic growth accompanied by — but not driven by — an increase in monetary spending. The increase in monetary spending, in turn, has been driven by wild credit growth, and has resulted in massive overinvestment in particular industries. There has been no shortage of commentaries and videos highlighting building booms, mania-type herd-mentality home buying, and the mass creation of buildings, shopping malls, and even multiple entire cities in China that stand unoccupied — all dramatic yet classic symptoms of credit bubbles.

The signs of bubbles are common, and date back to the 1600s. Even if we knew nothing about money and credit and their causing of financial bubbles, we should by now recognize the typical bubble-oriented characteristics — i.e., exponentially rising prices, investment and purchasing manias, exuberance over a new and unusual trend, etc. — and know that they are symptoms representing an actual bubble.

Given the lag effect of money and credit on the financial system and its transmission to the real economy, it is difficult to tell exactly when the rising interest rates and slowing money supply will result in reductions in the rate of spending and a reversal of the money multiplier, but when they do, a Chinese credit contraction, financial meltdown, and economic malaise won't be far behind.

Of course this is the same sort of economic "analysis," economics being a pseudo-science, that said with great certitude that China could never sustain the growth it has shown for the last forty years nor even achieve the foundations of independence and education of the populace under Mao while the US and lesser colonial powers opposed it every step of the way.
Those who subscribe to this trash are like the phrenologists, psychoanalysts and Xtian missionaries of earlier pseudo-science.
In short, pathetic.

Not much substance to your refutation there Truthy – what else ya got? Like, you know, facts and stuff? Or are you all hat and no cattle? You don't give much to go on, and the ad hominem attacks on the writer and his readers only proves you have a big mouth.

A rare common sense article in today's containment minded administration and media. I might add that recent comments by officials from State, Treasure and Defense Departments fits the historical profile of a declining empire taking more and more imperialistic tone towards rising challenger.

China should focus more on developing its western and rural regions and not just its urban eastern regions. They should also take better care of the environment. They don't have to wreck the environment to raise their standard of living.

I do believe they are doing that. Coal is a major source of pollution in China. The Chinese are seeking to use less coal by purchasing Russian natural gas in the coming years, in a huge energy deal which does not use the dollar and is one more nail in the coffin of the petrodollar. Interestingly, also in the environmental arena, I have not heard of any Chinese fracking projects anywhere in the world, unlike another country that readily comes to mind.

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